Ulster County tax case court ruling causes big ripples

KINGSTON — A state appellate court says the way Ulster County charges property owners for missing back tax installment plans is “unreasonable” and excessive.

And the case could have greater implications for other taxing agencies in the state that use the same methodology.

The opinion, decided last month by the State of New York Supreme Court, Appellate Division Third Judicial Department, pitted Ulster County against Ered Enterprises Inc., owner of the Alpine Inn in Shandaken.

John Darwak, who represents Ered, said the case revolved around how the county calculated how much money an entity owed when it failed to pay back taxes through installments.

The issue arose when the Alpine Inn hit hard times after a less-than-average snowfall one year, hurting business, Darwak said. It defaulted on its taxes and set up an installment plan with the county to pay the taxes, Darwak said.

But with just three payments left, the Alpine Inn again defaulted after major storms hit the region, cut off roads in the area and killed business, Darwak said. The county then began foreclosure proceedings.

The issue arose when the county calculated what Ered owed.

“The county took the position that when a payment wasn't made that installment agreement was void from the beginning,” Darwak said.

When it got to appeals court, judges found the case had never been litigated before at its level and laid down an explanation “for all courts and taxing authorities to apply in similar cases.”

Ultimately, judges argued Ulster County's methodology was flawed and sent case back to the county to recalculate.

Steve Aquario from the New York State Association of Counties said the decision could affect between 8-12 counties throughout the state that have laws that allow back-tax installment payments.

He said the decision used “unusually harsh words” and could discourage counties from allowing taxpayers to pay back taxes through installments.

Aquario said the Association of Counties is reviewing the case to see if the state real property law needs to be changed and will be notifying other counties.

Albany attorney Robert Rausch, on behalf of Ulster, filed a motion with the state's highest court arguing it should hear the case because it's both novel and of public importance.